NVIDIA seems to be playing the blame game according to a article over at Xbit. This is what they had to say, "Chief executive officer of NVIDIA Corp. said that besides continuously increasing capital expenditures that the company ran into in the recent months will be accompanied by lower than expected gross margins in the forthcoming quarter. The company blames low yields of the next-generation code-named Kepler graphics chips that are made at TSMC’s 28nm node. “Decline [of gross margin] in Q1 is expected to be due to the hard disk drive shortage continuing, as well as a shortage of 28nm wafers. We are ramping our Kepler generation very hard, and we could use more wafers. The gross margin decline is contributed almost entirely to the yields of 28nm being lower than expected. That is, I guess, unsurprising at this point,” said Jen-Hsun Huang, chief executive officer of NVIDIA, during a conference call with financial analysts.

NVIDIA’s operating expenses have been increasing for about a year now: from $329.6 million in Q1 FY2012 to $367.7 million in Q4 FY2012 and expects OpEx to be around $383 million in the ongoing Q1 FY2013. At the same time, the company expects its gross margins in Q1 FY2013 to decline below 50% for the first time in many quarters to 49.2%. Nvidia has very high expectations for its Kepler generation of graphics processing units (GPUs). The company claims that it had signed contracts to supply mobile versions of GeForce “Kepler” chips with every single PC OEM in the world. In fact, NVIDIA says Kepler is the best graphics processor ever designed by the company. [With Kepler, we] won design wins at virtually every single PC OEM in the world. So, this is probably the best GPU we have ever built and the performance and power efficiency is surely the best that we have ever created,” said Mr. Huang.

Unfortunately for NVIDIA, yields of Kepler are lower than the company originally anticipated and therefore their costs are high. Chief exec of NVIDIA remains optimistic and claims that the situation with Fermi ramp up was ever worse than that. “We use wafer-based pricing now, when the yield is lower, our cost is higher. We have transitioned to a wafer-based pricing for some time and our expectation, of course, is that the yields will improve as they have in the previous generation nodes, and as the yields improve, our output would increase and our costs will decline,” stated the head of NVIDIA.

Kepler is NVIDIA's next-generation graphics processor architecture that is projected to bring considerable performance improvements and will likely make the GPU more flexible in terms of programmability, which will speed up development of applications that take advantage of GPGPU (general purpose processing on GPU) technologies. Some of the technologies that NVIDIA promised to introduce in Kepler and Maxwell (the architecture that will succeed Kepler) include virtual memory space (which will allow CPUs and GPUs to use the "unified" virtual memory), pre-emption, enhance the ability of GPU to autonomously process the data without the help of CPU and so on. Entry-level chips may not get all the features that Kepler architecture will have to offer."

I imagine we will be, it may have been better to wait another generation before moving on as it is. This news is not surprising to me. Nvidia has been doing good financially, so I expected it was external.

Every year it seems there is another production problem related to TSMC or GF. Really makes me want to ask an ATI exec if they factored that in when they decided to close their in house fabs and go with them. Bad publicity + delays like this have to cut into profits. Maybe the cheaper production outweighs this but I'd have for sure looked at this downside and considered that in the long run it would be better to keep things in house.

Projections are almost always wrong. Period. Full stop.
Criticizing on the basis of a commentary which was, at best, cryptic, is just as wrong.

So, NV says it's all TSMC's fault. Why? because they have to; they can't ship out a ton of GPUs now, if they say nothing and pretend it's all OK, it'll be a bit like the Bulldozer rollout for them.

"Hey guys, our 28nm yield is pretty bad, so uhh, you're gonna pay for it, and unless you fork over the money IMMEDIATELY to get the few cards we ship, you're gonna wait for it."
*NV guy waves his hand at you as you look at those AMD GPUs and says,*
"Those aren't the cards you're looking for, move along now. Here's a shiny brochure about the awesomness you can have from us.... six months from now."

Projections are almost always wrong. Period. Full stop.
Criticizing on the basis of a commentary which was, at best, cryptic, is just as wrong.

So, NV says it's all TSMC's fault. Why? because they have to; they can't ship out a ton of GPUs now, if they say nothing and pretend it's all OK, it'll be a bit like the Bulldozer rollout for them.

"Hey guys, our 28nm yield is pretty bad, so uhh, you're gonna pay for it, and unless you fork over the money IMMEDIATELY to get the few cards we ship, you're gonna wait for it."
*NV guy waves his hand at you as you look at those AMD GPUs and says,*
"Those aren't the cards you're looking for, move along now. Here's a shiny brochure about the awesomness you can have from us.... six months from now."

Projections are almost always wrong. Period. Full stop.
Criticizing on the basis of a commentary which was, at best, cryptic, is just as wrong.

So, NV says it's all TSMC's fault. Why? because they have to; they can't ship out a ton of GPUs now, if they say nothing and pretend it's all OK, it'll be a bit like the Bulldozer rollout for them.

"Hey guys, our 28nm yield is pretty bad, so uhh, you're gonna pay for it, and unless you fork over the money IMMEDIATELY to get the few cards we ship, you're gonna wait for it."
*NV guy waves his hand at you as you look at those AMD GPUs and says,*
"Those aren't the cards you're looking for, move along now. Here's a shiny brochure about the awesomness you can have from us.... six months from now."